The politics of bank failures in Russia

Abstract

ABSTRACT Russia has witnessed a high number of bank failures over the last two decades. Using monthly data for 2002–2020, spanning four election cycles (2004, 2008, 2012, 2018), we test the hypothesis that bank failures are less likely before presidential elections. We find that, in general, bank failures are less likely to occur in the 12 months leading up to an election. However, we do not observe that bank failures during electoral cycles are more pronounced for banks associated with greater political costs (financial troubles) than for other reasons (illegal activities). Overall, our results provide mixed evidence that political cycles matter for the occurrence of bank failures in Russia.